By Maximilian Clarke

Incidences of online fraud in the UK dropped by a third, in the first half of 2011, to £16.9 million, marking the second consecutive year of declines.

Cheque fraud and telephone banking rose over the same period, figures published yesterday by Financial Fraud Action UK though together volumes have fallen due to increased security measures. These security measures, however, have come at an increased cost to the consumer.

William Beer, a director in PwC's Information and Cyber Security, discusses the changing nature of security in banks:

“While these numbers look very encouraging it is important to recognise the price customers have to pay for safe online banking. Two-factor authentication has now become common, with customers having to carry a keyfob or other device in order to log into their bank accounts. While this has lessened the risk of fraud, it has introduced an element of inflexibility into the system and should not be seen as a silver bullet.

“The fact that the banks are doing such a good job in protecting their customers and themselves from online fraud, means that organised criminals are now moving more towards other, possibly softer targets, such as the European Carbon Trading Market. It is also important to note that cyber-crime is global, as are many of the banks that criminals target, so figures based solely on UK fraud might not tell the whole story.

"The threats from the internet represent a massive challenge shared by public and private sectors worldwide. To meet the imperatives of the cyber era, we believe that public and private sector organisations will need to adopt new structures, roles and governance, while also engaging in close and continuing collaboration around the cyber agenda with other organisations."


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